Knight Frank India's latest report records a sharp rise in low performing retail assets with approximately 13.3 million square feet (mn sq ft) of retail shopping centre space categorised as ‘Ghost Shopping Centre’[2]. There has been an increase of 59% year-on-year (YoY) in Ghost Shopping Centre by Gross Leasable Area (GLA) since 2022 in the prime markets while the number of shopping centres that moved to 64 shopping centres by the end of 2023 over 57 in 2022. As a result of the rise in Ghost Shopping Centres, Knight Frank India estimates that loss of value to be at INR 67 billion (Bn) or USD 798 million in 2023.
National Capital Region (NCR) accounted for the highest Ghost Shopping Centre stock measuring at 5.3 mn sq ft (rise of 58% YoY), followed by Mumbai with 2.1 mn sq ft (rise of 86% YoY) and Bengaluru with 2.0 mn sq ft (rise of 46% YoY). Hyderabad is the only city to record a decline in the Ghost Shopping Centre stock by 19% YoY to 0.9 mn sq ft in 2023. The sharpest rise in Ghost Shopping Centres was recorded in Kolkata (23=7% YoY), albeit at a lower base.
In tier 1 cities the total number of shopping centres have reduced in a period of one year. Despite new addition of 8 new retail centres, total number of shopping centres reduced to 263 in 2023 as 16 shopping centres were shut down over the last year. Underperforming shopping centres were either demolished due to reasons such as developers undertaking residential or commercial developments or were permanently closed or auctioned.
Think India Think Retail 2024 - Shopping Centre and High Street Dynamics Across 29 Cities, delve into the retail real estate markets beyond the top-tier markets. This comprehensive study covers 340 shopping centres and 58 high streets across 29 Indian cities, conducted through primary surveys. This unique survey meticulously examines retail locations in the selected markets to compile a comprehensive compendium of store-level information.
Shopping centres in distress grapple with ongoing hurdles, compounded by fresh additions worsening their already elevated vacancy rates. This surge has led to a rise in the count of shopping centres labelled as Ghost Shopping Centre stock. Such a scenario offers institutional investors the chance to explore avenues for repurposing or revitalizing their retail portfolios, while developers can seize opportunities to monetize these assets through repurposing or redevelopment efforts.
India has a total shopping centre stock of 125.1 mn sq ft. The top 8 Indian cities constitute 75% of the total GLA, admeasuring 94.3 mn sq ft across 263 shopping centres while Tier 2 cities constitute 30.8 mn sq ft. Of the top 8 cities, NCR (31.3 mn sq ft), Mumbai (16.3 mn sq ft) and Bengaluru (15.6 mn sq ft) were the top three cities in the pecking order of GLA available in the shopping centres.
Amongst the tier II cities, Lucknow (5.7 mn sq ft), Kochi (2.3 mn sq ft) and Jaipur (2.1 mn sq ft) were the leading three cities in terms of GLA available in shopping centres. Lucknow has emerged as a key player with an impressive share of 18% gross leasable area within Tier 2 Cities.
Overall shopping centre vacancy, across leading eight cities in India has improved from 16.6% in 2022 to 15.7% in 2023, noting an 87-basis point reduction. The overall shopping centre vacancy includes Ghost Shopping Centres. However, upon exclusion of Ghost Shopping Centres from the stock in the leading 8 cities, the shopping centre health in India improves dramatically from 7.4% in 2023 due to the excellent performance of Grade A assets and reasonable occupancy in Grade B assets.
